How to Grow Your Savings; APY Savings Account!
Saving money isn’t easy. If it was we would all have secure savings accounts and there would be no reason for you to be reading this. Although, it’s a reality in today’s world that having a secure savings account whether it be for emergency funds or a down payment for a larger purchase we need to be thinking about savings and commit to a plan.
The problem about savings is that it takes discipline, a plan of action and committing to those actions. Here are some ways you can save in your everyday. If you’re looking for specific savings plans with actionable actions I have a post coming soon about that.
Start Here
Before you can begin saving you need to write out how much money you’re bringing in per month and how much is going out, solely just to live. Here are some questions to consider:
1. How much does it cost us to live (rent, food, utilities, bills, loans) - necessities only
2. How much income on average is coming in per month and what is left over after paying for all the necessary things?
3. How much are you spending on “fun” things? Entertainment, eating out, travel, unnecessary spending? - Look at the last month or two of spending to get an average
4. Open an APY Savings Account. Read more about APY Savings Accounts Here.
** Tip: I use Wealthfront for my savings and love it. You can open your account here.
Find Your Savings Plan
Now that you know how much it costs you to live and where your extra money has been going you can find a savings plan that works for you. Depending on the intensity or long-term plan you have in mind you can find a plan that fits your lifestyle.
Here are some saving plans you can follow:
Savings Tips
1. Envelope Savings Plan - This is where you are limiting yourself to a specific amount per month and once that money has been spent you have to live without or wait until next month. If you need discipline, a hard deadline to your spending and no opportunity to splurge this plan is for you. Read more HERE.
2. Limit Yourself to “Fun” Spending
After looking at your finances it’s important to see if you’re buying excess meals out, clothes, online shopping, pointless gadgets, home decor, etc.. After looking at this it gives you a good idea of where you can cut some things out.
If you are finding a majority of your monthly spending is coming from “fun” spending, read more about this savings plan HERE. I give my exact “fun” spending limits in this blog HERE.
3. All Extra Cash Goes to Savings
Simply put, put every extra dollar you’re not spending anymore into your savings account. At the end of the month and all your bills, rent, etc. has been paid but all of your extra cash into your savings and watch it grow! If you want to know how to allocate your extra cash and turn it into savings read more HERE.
This is a good savings plan for people who need things out of sight out of mind. This is automatically done for you and is great for someone who is busy, distracted or will spend money if it’s there. Read more about why setting up auto-deposits will save your life HERE.
6. Track your expenses - I know this can sound like a lot of work but there’s no excuse to not know where your spending is happening. There are apps and excel sheets that can help make this easier for you. When you begin tracking your expenses sometimes this is all it takes to start cutting back in your life.
Actually having to put your purchases to a visual representation of how much you spend you’ll begin cutting back your mindless purchases. If you want to learn more about tracking your monthly purchases and budget read HERE.
7. The 50/30/20 rule - Your living costs are not over 50% over your take home pay, 30% is for want/fun (I would suggest scaling this down if you can) and 20% goes to retirement/savings or debt.
All in All
Saving money more than often consists of cutting spending in certain areas of your life and putting it elsewhere. This means you need to locate where the spending can be cut and what you can live without. You then allocate this money into a savings account and watch your savings grow.
I can guarantee watching a savings account grow will give you much more satisfaction than another pair of shoes.